"What is money laundering?
Money laundering is the process used to disguise the source of money or assets derived from criminal activity. Profit-motivated crimes span a variety of illegal activities from drug trafficking and smuggling to fraud, extortion and corruption. The scope of criminal proceeds is significant â€" estimated at some $500 billion to $1 trillion (U.S.) worldwide each year.
Money laundering facilitates corruption and can destabilize the economies of susceptible countries. It also compromises the integrity of legitimate financial systems and institutions, and gives organized crime the funds it needs to conduct further criminal activities. It is a global phenomenon, and the techniques used are numerous and can be very sophisticated. Technological advances in e-commerce, the global diversification of financial markets and new financial product developments provide further opportunities to launder illegal profit and obscure the money trail leading back to the underlying crime.
While the techniques for laundering funds vary considerably and are often highly intricate, there are generally three stages in the process:
Placement: involves placing the proceeds of crime in the financial system;
Layering: involves converting the proceeds of crime into another form and creating complex layers of financial transactions to disguise the audit trail and the source and ownership of funds (e.g., the buying and selling of stocks, commodities or property); and,
Integration: involves placing the laundered proceeds back in the economy under a veil of legitimacy."
Thursday, June 26, 2008
Thursday, June 12, 2008
AMP (Almost a Mortgage Professional)
AMP – Almost a Mortgage Professional is how one broker I spoke to last year described the Accredited Mortgage Professional designation. Unfortunately, I can’t say a whole lot more about the dubious title. I will admit I was one of the first to jump in and obtain my new accreditation. The idea was creditable and I still support any effort that puts forward the position and professionalism of today’s honest working mortgage originator. When put to the test of upholding such lofty standards placed on its members, however, CAAMP dropped the ball.
A longtime member of CAAMP since I started my brokerage in 1998, it was a disappointing experience when the day came that I filed a complaint. In all my years brokering, I had never filed a complaint against anyone. Yes, I had heard stories about conduct unbecoming a professional, but I had not dealt with it firsthand. And then one day I had two rather unassuming immigrants walk into my office looking for a second opinion on a second mortgage they signed up for.
I couldn’t sit on my hands and ignore what I witnessed. One of the more disconcerting facts was that the individual broker involved with these clients held the same CAAMP membership card as me. This was a good opportunity, so I thought, to see how enforceable the organization’s Code of Ethics was. So I filed a complaint with CAAMP in accordance with its complaints process. I also suggested the clients file a complaint with the Financial Services Commission of Ontario (FSCO).
In my letter, I cited inappropriate conduct and a violation of rules 1, 2, 3, 5 and 10 of the CAAMP Code of Ethics – the latter being the most serious vis-à-vis the broker’s predatory lending practices and outright fraud. I enclosed the broker’s Statement of Mortgage as evidence of this charge. The total cost of borrowing was 42.729%, but the broker’s disclosure was only 14.878%.
The inappropriate conduct included: making the client wait one month for an answer; not disclosing his fee until the clients came in to sign – a drive from Burlington to North York, no less; not providing the client a copy of the lender’s commitment letter; asking the client to sign without dating anything; and telling the client not to contact a lawyer. The broker’s high pressure and delay tactics were a throwback to a much earlier period of time when this boiler room practice was more prevalent and far less noticed – not to mention most of this conduct was a breach of the Ontario Mortgage Brokers Act.
This is a sad commentary and doesn’t speak to the professional image the majority of us have worked hard to establish. I expected CAAMP would act quickly to discipline the accused. And I was more encouraged to file my complaint after reading the CAAMP complaints process, which stated:
“Handling consumer and industry complaints is one of CAAMP’s most important functions… Effective complaint handling ensures CAAMP is able to uphold the high standards both members and consumers expect. CAAMP’s complaints process ensures legitimate complaints are appropriately considered, while protecting members from frivolous ones.”
Unfortunately, nothing was done – not even a slap on the wrist. And what bothered me the most was CAAMP’s handling of my complaint – yet another well-conceived process written into their constitution. It was approaching two years after I officially filed my complaint that I learned of the outcome. To top it all off, CAAMP didn’t notify me of the outcome. After several ignored e-mails, I finally received this response:
“Your complaint against Mr X was investigated by Financial Services Commission of Ontario. When their investigation was completed they confirmed with me that they could not find any evidence that would cause them to take any action against Mr X and they dismissed the complaint. As a result of FSCO’s decision to dismiss the complaint the Chair of the Ethics committee determined that your complaint would not be referred to a Hearing Committee and the file was closed.”
Wow! That’s some complaints process. And, yes, I was equally disheartened to hear that FSCO did nothing. CAAMP did make it clear it would be waiting on the FSCO outcome for legal reasons I find difficult to digest. It seems one only needs to threaten a lawsuit against CAAMP and it will back down. I was told by CAAMP the accused had filed 187 pages of documents in his defence. That’s about a barn full of BS, I’d say.
I still had hope in the early going when CAAMP communicated to me the following:
“Even if FSCO dismisses the complaint, CAAMP will proceed with your complaint against Mr X. The Chair and members of a Hearing Panel looked at the evidence earlier this year and they believe that this case justifies a hearing of the Ethics Committee. We are ready to go to a Hearing once we get word about FSCO’s response.”
Was this the same Chair of the Ethics Committee? Sadly, no hearing ever happened. In the end, Mr X bluffed and walked, and our industry took a giant step back. If we are to move forward and truly become a self-regulated profession, we need an industry association that will stand up to talk the talk and fight the fight. I personally don’t buy the argument that CAAMP was afraid of getting sued. Furthermore, what message does that send to the membership about its integrity and vigilance? CAAMP’s Code of Ethics and complaints process are just fine in writing, but this industry needs far more than hallow words of wisdom. Having a Code of Ethics behind your name or title is one thing, but standing behind your members and enforcing the code is a far greater acclamation.
The good news is, I was able to arrange a second mortgage (line of credit) for my clients with a reputable institutional lender, and at a cost they could agree with.
A longtime member of CAAMP since I started my brokerage in 1998, it was a disappointing experience when the day came that I filed a complaint. In all my years brokering, I had never filed a complaint against anyone. Yes, I had heard stories about conduct unbecoming a professional, but I had not dealt with it firsthand. And then one day I had two rather unassuming immigrants walk into my office looking for a second opinion on a second mortgage they signed up for.
I couldn’t sit on my hands and ignore what I witnessed. One of the more disconcerting facts was that the individual broker involved with these clients held the same CAAMP membership card as me. This was a good opportunity, so I thought, to see how enforceable the organization’s Code of Ethics was. So I filed a complaint with CAAMP in accordance with its complaints process. I also suggested the clients file a complaint with the Financial Services Commission of Ontario (FSCO).
In my letter, I cited inappropriate conduct and a violation of rules 1, 2, 3, 5 and 10 of the CAAMP Code of Ethics – the latter being the most serious vis-à-vis the broker’s predatory lending practices and outright fraud. I enclosed the broker’s Statement of Mortgage as evidence of this charge. The total cost of borrowing was 42.729%, but the broker’s disclosure was only 14.878%.
The inappropriate conduct included: making the client wait one month for an answer; not disclosing his fee until the clients came in to sign – a drive from Burlington to North York, no less; not providing the client a copy of the lender’s commitment letter; asking the client to sign without dating anything; and telling the client not to contact a lawyer. The broker’s high pressure and delay tactics were a throwback to a much earlier period of time when this boiler room practice was more prevalent and far less noticed – not to mention most of this conduct was a breach of the Ontario Mortgage Brokers Act.
This is a sad commentary and doesn’t speak to the professional image the majority of us have worked hard to establish. I expected CAAMP would act quickly to discipline the accused. And I was more encouraged to file my complaint after reading the CAAMP complaints process, which stated:
“Handling consumer and industry complaints is one of CAAMP’s most important functions… Effective complaint handling ensures CAAMP is able to uphold the high standards both members and consumers expect. CAAMP’s complaints process ensures legitimate complaints are appropriately considered, while protecting members from frivolous ones.”
Unfortunately, nothing was done – not even a slap on the wrist. And what bothered me the most was CAAMP’s handling of my complaint – yet another well-conceived process written into their constitution. It was approaching two years after I officially filed my complaint that I learned of the outcome. To top it all off, CAAMP didn’t notify me of the outcome. After several ignored e-mails, I finally received this response:
“Your complaint against Mr X was investigated by Financial Services Commission of Ontario. When their investigation was completed they confirmed with me that they could not find any evidence that would cause them to take any action against Mr X and they dismissed the complaint. As a result of FSCO’s decision to dismiss the complaint the Chair of the Ethics committee determined that your complaint would not be referred to a Hearing Committee and the file was closed.”
Wow! That’s some complaints process. And, yes, I was equally disheartened to hear that FSCO did nothing. CAAMP did make it clear it would be waiting on the FSCO outcome for legal reasons I find difficult to digest. It seems one only needs to threaten a lawsuit against CAAMP and it will back down. I was told by CAAMP the accused had filed 187 pages of documents in his defence. That’s about a barn full of BS, I’d say.
I still had hope in the early going when CAAMP communicated to me the following:
“Even if FSCO dismisses the complaint, CAAMP will proceed with your complaint against Mr X. The Chair and members of a Hearing Panel looked at the evidence earlier this year and they believe that this case justifies a hearing of the Ethics Committee. We are ready to go to a Hearing once we get word about FSCO’s response.”
Was this the same Chair of the Ethics Committee? Sadly, no hearing ever happened. In the end, Mr X bluffed and walked, and our industry took a giant step back. If we are to move forward and truly become a self-regulated profession, we need an industry association that will stand up to talk the talk and fight the fight. I personally don’t buy the argument that CAAMP was afraid of getting sued. Furthermore, what message does that send to the membership about its integrity and vigilance? CAAMP’s Code of Ethics and complaints process are just fine in writing, but this industry needs far more than hallow words of wisdom. Having a Code of Ethics behind your name or title is one thing, but standing behind your members and enforcing the code is a far greater acclamation.
The good news is, I was able to arrange a second mortgage (line of credit) for my clients with a reputable institutional lender, and at a cost they could agree with.
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